1099-MISC question

[mblatour]

Hi all,

I'm drawing a blank at the moment and am probably going to later say "duh", but I'm going to ask anyway.

If client lives in MN - works mostly in MN - spouse works in MN - and he has a 1099-MISC from a company in WI, does he have to file a WI return for any reason?

Thanks in advance!

Becky

[Jesse]

Probably not in 2009

Wisconsin currently has reciprocity agreements with five states: Illinois, Indiana, Kentucky, Michigan, and Minnesota. These agreements state, in general, that residents of these states will be taxed on personal service income by their home state, rather than by Wisconsin. Conversely, Wisconsin will tax Wisconsin residents working in one of these states and the other state generally will not tax the personal service income of Wisconsin residents who are employed in that state. Reciprocity applies only to personal service income. Personal service income generally includes salaries, wages, commissions, and fees earned by an employee. Reciprocity does not apply to other types of income, such as gains on the sale of property, rental income, and lottery winnings.

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However January 1, 2010 the reciprocity agreement between Wisconsin and Minnesota has ended.

[taxea]

What state did he do the work in? What state was he in when he received payment? Does the other state company have an office in his state?

[mblatour]

the work was done

in both states. Most of the nonemployee compensation just involved him buying materials and supplies from supply houses that he has accounts with (more or less so that the company who 1099'd him could use his discount at these supply houses). He resides in MN and the company is located in WI. We live in the Twin Ports - meaning Duluth MN borders Superior WI. These supply houses are located on both sides of the bridge some in each state. He did do some labor as well.

[taxea]

where he purchased supplies doesn't matter. Where he worked and where he got paid does. Where is his office? If he billed from home state and was paid in home state then I would only do a home state return.

[Snaggletooth]

Source

and he has a 1099-MISC from a company in WI, does he have to file a WI return for any reason?

Thanks in advance!

Becky

Becky, the 1099-MISC could have come from Mozambique and it wouldn't have made any difference. In many cases, this is the "home office" of the payer and has no relationship to taxability of any location.

However, later in the thread you told us he actually did "some work" in Wisconsin. This means he is probably liable to file as a Wisconsin non-resident as long as his income level attributable to WI exceeds their filing threshold. Don't know whether self-employed individuals would be exempted from filing due to reciprocity or not --

[gkaiseril]

Wisconsin currently has reciprocity agreements with five states: Illinois, Indiana, Kentucky, Michigan, and Minnesota. These agreements state, in general, that residents of these states will be taxed on personal service income by their home state, rather than by Wisconsin. Conversely, Wisconsin will tax Wisconsin residents working in one of these states and the other state generally will not tax the personal service income of Wisconsin residents who are employed in that state. Reciprocity applies only to personal service income. Personal service income generally includes salaries, wages, commissions, and fees earned by an employee. Reciprocity does not apply to other types of income, such as gains on the sale of property, rental income, and lottery winnings.

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However January 1, 2010 the reciprocity agreement between Wisconsin and Minnesota has ended.

Be real careful with not reading too much into the pr release about the Wage Reciprocity agreements. It might not cover independent contractors. And for the Wisconsin Illinois Wage Reciprocity agreement this is the case, and this is noted by Wisconsin in their pamphlet about Reciprocity.

"Illinois Reciprocity with Illinois is limited to wages, salaries, commissions, and any other
remuneration paid to employees for persona services. It does not apply to income from self employment."

"Indiana Reciprocity with Indiana is limited to wages, salaries, tips, and commissions received as an employee."

"Kentucky Reciprocity with Kentucky is limited to wages, salaries, and commissions received as an employee."

"Michigan Reciprocity with Michigan is limited to compensation for personal services, including wages, salaries, and commissions received as an employee."